Joan buys a $1000, 4% bond with semi-annual coupons which is redeemable at par in 10 years. Joan pays a price for the bond which is based on a yield to maturity of 5% compounded semi-annually. After receiving the 6th coupon, she sells the bond to Kirsten for $1000. You will need to use either a financial calculator or MS-Excel (either =IRR() or =RATE()).

a) Calculate Joan's yield (nominal rate compounded semi-annually).

b) Calculate Kirsten's yield to maturity (nominal rate compounded semi-annually).